Drug prices do not escape the dynamics of inflation. However, in the last three months, the increase curve has intensified and has further deteriorated the purchasing capacity of all consumers. Especially those who consume them the most: pensioners. It is estimated that this segment of the population He allocates between 20% and 30% of his income to purchasing medicines.
In January, as part of a general increase of 13.6% suffered by the basket of medicines, The 10 drugs most consumed by older adults showed an average increase of 31%. Inflation in January was 20.6%. Above this average, monthly increases of 83% and 45%, second A”Report on the drugs most consumed by the elderly in Argentina”. This is a report prepared by the Center for Political Economy of Argentina (CEPA) together with the Latin American Association of Community Gerontology (ALGEC) and the Center for Political Studies for the Elderly (CEPPEMA).
According to this research, in 2020, the year the pandemic began, remedies recorded an average increase of 34.6%. In 2021, a 42.9% of increase, and in 2022 a 82.8%. In 2023 the average increase in pharmacies was 276% surpassing the general inflation index which closed the year with an increase of 211%.
In November alone there was an increase of 25.7% and in December the price increase was 40.9%, well above the inflation rates of 12.8% and 25% respectively. .5%, according to INDEC.
These strong increases have obviously led to a decline in consumption: The sale of medicines between November and January, according to CAME, collapsed by up to 45%. To varying degrees, the decline has also been recognized by the various chambers that bring together pharmacists.
According to Eugenio Semino, defender of the Third Age, a phenomenon that is occurring is that ““The pensioner does not consume the remedies according to the doses prescribed by doctors but according to what he can purchase.” Then “they self-medicate by varying the medical indication and treatment, so it ends up not working”, warned the ombudsman.
As the CEPA report highlights, “in this context, prices with PAMI coverage (which reaches 60% of the country’s elderly population) turned out to be so a fundamental element for taking care of the income of the elderly, while they recorded increases that were much lower than those represented by public sales prices and the general inflation index. That is to say, they represented a significant saving for the affiliated population.”
Medicines, exchange rate and income
Laboratories usually explain that, given the participation of imported inputs in the production process, medicines should follow the evolution of the exchange rate. According to CEPA, “regardless of the truth of it, what is perceived is a decoupling from exchange rate evolution starting from April 2021.”
“Drug prices and those measured by the CPI have been decoupled from the evolution of the exchange rate, reaching a significant gap.” According to Hernan Lechter, an economist at CEPA, “when there are no sudden movements in the exchange rate and there is a process of appreciation of the exchange rate, medicines experience increases above the exchange rate. Furthermore, in case of strong devaluations, medicines instantly reflect such increases, as could be seen in August and December 2023, as well as in 2019,” he commented.
Regarding the impact on income, the economist explains: “After Javier Milei’s victory, The minimum retirement without bonuses was reduced by 20.1 percentage points from December 2023 to January 2024 measured in terms of drugs (according to PAMI retail prices)
Looking to the future, “10% increases in this basket of drugs are expected for the months of February and March 2024, while a 33.5% update of the minimum retirement in March is contemplated. With these assumptions, it would be recorded a new drop in the minimum retirement without bonus in February of 5.4 percentage points compared to January and a recovery in March that does not compensate for subsequent declines.
“The minimum retirement with bonus drops by 25.2 percentage points between December 2023 and January 2024 and would see another drop of 6.8 points from January to February under the same assumptions.” Taking into account a $70,000 bonus for March would not make up for the loss of purchasing power previous decisions in relation to the medicine basket,” the report clarifies.
Source: Clarin
